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Wednesday, April 10, 2013

US universities in Africa 'land grab'

US universities in Africa 'land grab'

Institutions including Harvard and Vanderbilt reportedly use hedge funds to buy land in deals that may force farmers out

US universities are reportedly using endowment funds to make deals that may force thousands from their land in Africa. Photograph: Boston Globe via Getty Images

Harvard and other major American universities are working through British hedge funds and European financial speculators to buy or lease vast areas of African farmland in deals, some of which may force many thousands of people off their land, according to a new study.
Researchers say foreign investors are profiting from "land grabs" that often fail to deliver the promised benefits of jobs and economic development, and can lead to environmental and social problems in the poorest countries in the world.
The new report on land acquisitions in seven African countries suggests that Harvard, Vanderbilt and many other US colleges with large endowment funds have invested heavily in African land in the past few years. Much of the money is said to be channelled through London-based Emergent asset management, which runs one of Africa's largest land acquisition funds, run by former JP Morgan and Goldman Sachs currency dealers.
Researchers at the California-based Oakland Institute think that Emergent's clients in the US may have invested up to $500m in some of the most fertile land in the expectation of making 25% returns.
Emergent said the deals were handled responsibly. "Yes, university endowment funds and pension funds are long-term investors," a spokesman said. "We are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way … The amounts are large. They can be hundreds of millions of dollars. This is not landgrabbing. We want to make the land more valuable. Being big makes an impact, economies of scale can be more productive."
Chinese and Middle Eastern firms have previously been identified as "grabbing" large tracts of land in developing countries to grow cheap food for home populations, but western funds are behind many of the biggest deals, says the Oakland institute, an advocacy research group.
The company that manages Harvard's investment funds declined to comment. "It is Harvard management company policy not to discuss investments or investment strategy and therefore I cannot confirm the report," said a spokesman. Vanderbilt also declined to comment.
Oakland said investors overstated the benefits of the deals for the communities involved. "Companies have been able to create complex layers of companies and subsidiaries to avert the gaze of weak regulatory authorities. Analysis of the contracts reveal that many of the deals will provide few jobs and will force many thousands of people off the land," said Anuradha Mittal, Oakland's director.
In Tanzania, the memorandum of understanding between the local government and US-based farm development corporation AgriSol Energy, which is working with Iowa University, stipulates that the two main locations – Katumba and Mishamo – for their project are refugee settlements holding as many as 162,000 people that will have to be closed before the $700m project can start. The refugees have been farming this land for 40 years.
In Ethiopia, a process of "villagisation" by the government is moving tens of thousands of people from traditional lands into new centres while big land deals are being struck with international companies.
The largest land deal in South Sudan, where as much as 9% of the land is said by Norwegian analysts to have been bought in the last few years, was negotiated between a Texas-based firm, Nile Trading and Development and a local co-operative run by absent chiefs. The 49-year lease of 400,000 hectares of central Equatoria for around $25,000 (£15,000) allows the company to exploit all natural resources including oil and timber. The company, headed by former US Ambassador Howard Eugene Douglas, says it intends to apply for UN-backed carbon credits that could provide it with millions of pounds a year in revenues.
In Mozambique, where up to 7m hectares of land is potentially available for investors, western hedge funds are said in the report to be working with South Africans businesses to buy vast tracts of forest and farmland for investors in Europe and the US. The contracts show the government will waive taxes for up to 25 years, but few jobs will be created.
"No one should believe that these investors are there to feed starving Africans, create jobs or improve food security," said Obang Metho of Solidarity Movement for New Ethiopia. "These agreements – many of which could be in place for 99 years – do not mean progress for local people and will not lead to food in their stomachs. These deals lead only to dollars in the pockets of corrupt leaders and foreign investors."
"The scale of the land deals being struck is shocking", said Mittal. "The conversion of African small farms and forests into a natural-asset-based, high-return investment strategy can drive up food prices and increase the risks of climate change.
Research by the World Bank and others suggests that nearly 60m hectares – an area the size of France – has been bought or leased by foreign companies in Africa in the past three years.
"Most of these deals are characterised by a lack of transparency, despite the profound implications posed by the consolidation of control over global food markets and agricultural resources by financial firms," says the report.
"We have seen cases of speculators taking over agricultural land while small farmers, viewed as squatters, are forcibly removed with no compensation," said Frederic Mousseau, policy director at Oakland, said: "This is creating insecurity in the global food system that could be a much bigger threat to global security than terrorism. More than one billion people around the world are living with hunger. The majority of the world's poor still depend on small farms for their livelihoods, and speculators are taking these away while promising progress that never happens."

Steve Cohen has been trying to buy Picasso's Le Reve for six years. Two weeks ago it emerged his dream had finally come true.
But his record $150m purchase looks more like a nightmare, as the hedge fund billionaire faces charges of insider trading and racketeering, enormous fines and the inevitable suggestion that one of Picasso's most famous works is, in fact, cursed.
Cohen's Connecticut-based SAC Capital recently seemed to have settled its long-running insider trading charges over improper trading with an agreement to pay $615.7m in fines to regulator the SEC. But last week the agreement fell apart when a judge questioned the largest part, irritated by a clause that let SAC neither admit nor deny wrongdoing.
A day later Michael Steinberg, one of Cohen's most trusted lieutenants and an SAC portfolio manager, was led out of his Park Avenue apartment by the FBI and charged with conspiracy and securities fraud.
Perhaps even worse for Cohen personally, yesterday a New York appeals court resurrected a lawsuit brought by his ex-wife, Patricia Cohen, seeking damages of $8.25m and claiming her ex-husband's hedge fund is "racketeering scheme" that engages in insider trading. She has filed claims under the Racketeer Influenced and Corrupt Organizations Act – an act created to prosecute mafia bosses – and claims he hid $5.5m from her during their 1990 divorce.
What is not in dispute is that Cohen has built an $8.8bn fortune through canny bets on the markets. He has also amassed one of the world's finest art collections, owning classic paintings by Edvard Munch, Willem de Kooning and Jackson Pollock as well as contemporary pieces including Damien Hirst's pickled shark.
It was a long journey to add Le Reve to his collection. Picasso is said to have painted the erotic portrait of his then mistress Marie-Thérèse Walter in a single afternoon and it has gone on to be one of his most famous works. Ownership of the prestigious work of art has proved problematic for some, however.
Cohen first tried to buy the painting from casino magnate Steve Wynn in 2006, for what would then have been a record $139m. But in a notorious incident shortly before the sale, Wynn accidentally knocked a six-inch hole in the painting in an incident that became known as "the $40m elbow" after the painting's value was slashed following a $90,000 repair.
The incident ended the sale and landed Wynn in a legal battle with his insurer Lloyd's of London. Luck changed for Wynn, however, and he eventually topped his original sale price despite the repair. The painting's previous owner was less fortunate.
Wynn bought Le Reve off Austrian-born investment fund manager Wolfgang Flöttl in 2001 as his business empire began to unravel. Flöttl too had made a fortune in hedge funds. His art collection included Cezanne and Van Gogh's Portrait of Dr Gachet. The high-flying Austrian was married to Anne Eisenhower, granddaughter of the US president.
In 2008 Flöttl was ordered to spend 10 months in prison, one of nine people convicted of playing a part in a scheme that cost Bawag, one of Austria's biggest banks, close to $2bn in losses.
The only truly happy owner of Le Reve appears to have been Victor Ganz, the famous art collector who originally paid $7,000 for the piece in 1941. Ganz and his wife Sally amassed a collection including works by Picasso, Jasper Johns, Robert Rauschenberg and Frank Stella through a lifetime of collecting. After their deaths in 2007 their collection was sold to pay estate taxes. Their collection, for which they had paid an estimated $2m, sold for over $206m at auction, representing a return of over 10,000%.

The threat by a UK-based hedge fund to sue Coal India, one of the world's largest coalmine operators, has thrown into sharp relief the crucial question of whether the terms of trade and investment are skewed in favour of rich countries and multinational companies.
The Children's Investment Fund (TCI), a British hedge fund run by Christopher Hohn, is a minority shareholder in Coal India after acquiring a 1.01% stake when the Indian government sold off 10% of the shares in 2010 to raise cash.
Some of the shares ended up in the hands of hedge fund managers, and the Indian government now faces the prospect of a legal fight with TCI, which gives a portion of its profits to a charity, the Children's Investment Fund Foundation, for helping children in Africa and India. The fund announced in April it had instructed lawyers; it is threatening legal action unless Coal India makes changes that it claims would benefit not just the shareholders, but also the Indian people.
The nub of TCI's argument is that Coal India be allowed to sell fuel at market prices, not government set rates, which are about 70% to 80% lower than prices the company has been able to get in limited auctions. The fund also wants the company, which has 549 billion rupees (about $10.5bn) in cash, to increase its dividend substantially.In a statement issued in April, TCI said it initially received a polite hearing, but that Coal India then "backed away from any kind of meaningful or substantive dialogue with TCI or any other minority shareholder. It will not now discuss any kind of plan to improve management and governance."
The statement continued: "TCI believes that a number of government directives are not in the public benefit and should not be followed by CIL (Coal India), because they destroy the profitability and value of the people of India's stake in CIL. Moreover, short-term exploitation of CIL's assets will cause untold damage to the Indian economy."
For its part, the Indian government argues it has to take a view of the big picture, which means providing inexpensive coal to power companies, steel mills and other businesses vital for the economy. India suffers from widespread power cuts, as demand exceeds supply; ensuring consistent power is a government priority.
TCI says it plans to take Coal India, its independent directors, and the government of India to court under the provisions of the UK-India bilateral investment treaty, rather than through the Indian courts. The move has angered trade activists.
"What this case really illustrates is how far global trade and investment rules have gone in increasing the power and influence of companies," said Ruth Bergan, co-ordinator for the Trade Justice Movement. "Under bilateral investment treaties, companies have been given the right to sue states, not in national courts, whether in host or home countries, but in international arbitration centres, based at the International Chamber of Commerce, the World Bank, and a handful of other often highly secretive centres."
Bergan reflects the wider concerns among activists that the odds are stacked against poor countries in such fora as the UN, which has drawn up a global compact for businesses so they "adhere to internationally accepted standards".
Friends of the Earth, La Via Campesina and other civil society groups have called on the UN, in the runup to the Rio+20 UN summit on sustainable development, to distance itself from corporate interests.
"Increasingly we see UN policies that do not necessarily serve the public interest, but rather support the commercial interests of certain companies or business sectors," they said. "The upcoming Earth summit in Rio in June should be seized as the opportunity to stop this trend, terminate dubious partnerships between the UN and businesses, and end the privileged access that has been granted to the corporate sector and consequently the excessive influence it is able to wield over important multilateral processes and decisions."
Civil society groups criticise the global compact for lacking any accountability mechanism. They say the global compact only expels companies if they do not report on human rights violations, not for perpetrating these violations. Civil society groups habitually suspect the worst of corporations, whereas developing country governments adopt a more pragmatic attitude on the basis that foreign investment brings jobs, even if the pay leaves much to be desired in some export processing zones (as the Guardian's John Vidal pointed out in a recent piece from Bangladesh).
As for the legal tussle between the Children's Investment Fund – who declined an invitation to comment – and Coal India, this will be held by civil society as a further example of how the terms of trade and investment are weighed in the favour powerful financial interests. Even impartial observers question the fund's decision to use provisions of the UK-India bilateral investment treaty rather than the Indian courts.
"There is a case for such legal disputes to be settled outside the country," said Salil Tripathi, director of policy at the Institute for Human Rights and Business, "but ideally that should be a last resort. It would be far better to try the case in India and exhaust the local systems first, rather than use a panel that may not have detailed knowledge of the economic policy or on-the-ground reality of the country."

Michelle Obama Photo at Whitehouse

About Me

As Project Director for Confederation Council Foundation for Africa inc.,I Aim to provide platform open doors for development towards the emerging entrepreneurship agenda among New American Migrants. We provide sustainable settlement towards self-sufficiency. The Foundation under my leadership intends to fulfil Immigration Settlement Program and the Millenium Development Goals Strategic Plan of Action. Our Mission is to Network for start-up business, job creation for talented and skilled individuals, Business Investments Locally and Abroad. We involve simple Economic and Educational Networking and empowerment - partnering with Federal Government, the Civic Societies, Faith Based and Non-Profit project under One-Stop-Service plan. The purpose is to encourage more Women and Youth who are the engine of CHANGE towards achieving sustainable policy enactment & Socio/Economic DEMANDs in order to curtail growing influx of African migration which will eventually reduce unwarranted relocation and suffering of many people.